Hanwha Ocean’s Q3 operating profit jumps 68% year on year as high-priced orders drive clear growth

[Financial News] Hanwha Ocean’s third-quarter operating profit surged 68% from a year earlier, as a growing volume of high-priced shipbuilding work drove clear growth.
Hanwha Ocean released preliminary third-quarter results on the 27th, reporting revenue of 3.4139 trillion won and operating profit of 485.7 billion won. Although the figures fell short of market consensus, revenue rose by about 400 billion won and operating profit by 200 billion won year on year.
For the first three quarters combined, revenue came to 12.067 trillion won and operating profit to 1.6629 trillion won. Compared with the same period last year, revenue increased 28% and operating profit surged 81%. Many expect full-year operating profit to top 2 trillion won.
The strong results are attributed to high-priced orders, particularly for liquefied natural gas (LNG) vessels. As of last month, orders included eight LNG carriers, six container ships, 18 very large crude carriers (VLCCs), three very large ammonia carriers (VLACs), three very large liquefied petroleum gas (LPG) carriers (VLGCs), and one wind turbine installation vessel (WTIV), among others, with a total value of $7.72 billion.
Construction of submarines and surface ships is also progressing steadily. The company’s expanded use of foreign-exchange hedging, which it has sustained since June, also helped protect profitability. This explains why profitability remained solid despite fewer working days and exchange-rate effects in the third quarter.
Profitability is expected to remain strong in the fourth quarter despite planned expenses such as performance bonuses. High-priced orders continue to increase, while the results of cost-cutting efforts are also becoming visible.
In particular, the Special Ship Division is expected to drive additional revenue by accelerating work on the second Jangbogo-III Batch-II Korean-designed 3,000-ton-class submarine and the fifth and sixth Ulsan-class frigate Batch-III (Chungnam-class) vessels.
The Energy Plant Division is normalizing work on projects whose construction starts had been delayed and moving into the production phase for new projects. Additional earnings are expected depending on early deliveries and the outcomes of discussions with clients.
Several developments could drive future growth. Some forecasts suggest that U.S. Navy orders for Chungnam-class frigates may be imminent. As the MASGA (Make American Shipbuilding Great Again) agreement on U.S.-Korea shipbuilding cooperation moves into full swing, Hanwha Ocean may secure additional orders, particularly through Hanwha Philly Shipyard. However, during its third-quarter earnings call that day, Hanwha Ocean said it had not yet received any direct benefits.
There are also high expectations for the nuclear-powered submarine program, which has government backing. During the earnings call, Hanwha Ocean announced the establishment of the Jangbogo M Development Team, a dedicated unit for the nuclear-powered submarine program. It said it had secured specialists and begun strengthening core technologies, adding that it was laying the groundwork by drawing on its existing submarine development capabilities.

[email protected] Kim Yun-ho Reporter